Correlation Between JPMorgan Chase and Kingfisher PLC

Can any of the company-specific risk be diversified away by investing in both JPMorgan Chase and Kingfisher PLC at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining JPMorgan Chase and Kingfisher PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JPMorgan Chase Co and Kingfisher PLC ADR, you can compare the effects of market volatilities on JPMorgan Chase and Kingfisher PLC and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in JPMorgan Chase with a short position of Kingfisher PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Chase and Kingfisher PLC.

Diversification Opportunities for JPMorgan Chase and Kingfisher PLC

-0.39

Correlation Coefficient

JPMorgan Chase  Kingfisher PLC

Very good diversification

The 3 months correlation between JPMorgan and Kingfisher is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Kingfisher PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingfisher PLC ADR and JPMorgan Chase is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on JPMorgan Chase Co are associated (or correlated) with Kingfisher PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingfisher PLC ADR has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Kingfisher PLC go up and down completely randomly.

Pair Corralation between JPMorgan Chase and Kingfisher PLC

Considering the 90-day investment horizon JPMorgan Chase is expected to generate 3.16 times less return on investment than Kingfisher PLC. But when comparing it to its historical volatility, JPMorgan Chase Co is 1.59 times less risky than Kingfisher PLC. It trades about 0.03 of its potential returns per unit of risk. Kingfisher PLC ADR is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  610.00  in Kingfisher PLC ADR on December 30, 2024 and sell it today you would earn a total of  42.00  from holding Kingfisher PLC ADR or generate 6.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

JPMorgan Chase Co  vs.  Kingfisher PLC ADR

JPMorgan Chase

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, JPMorgan Chase is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Kingfisher PLC ADR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kingfisher PLC ADR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent technical indicators, Kingfisher PLC may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with JPMorgan Chase and Kingfisher PLC

The main advantage of trading using opposite JPMorgan Chase and Kingfisher PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Chase position performs unexpectedly, Kingfisher PLC can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Kingfisher PLC will offset losses from the drop in Kingfisher PLC's long position.

The idea behind JPMorgan Chase Co and Kingfisher PLC ADR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the FinTech Suite module to use AI to screen and filter profitable investment opportunities.